Soma Gold signs deal to buy back El Limon NSR royalty

Executive Summary

• Soma Gold Corp. entered into a definitive agreement to purchase and extinguish the 3 % net smelter return royalty (and subsequent 0.5 % royalty) on its El Limon gold mine from Red Rock Resources PLC for cash consideration of $1,876,000 (≈£1 M).
• The transaction includes issuance of 200,000 common share purchase warrants to Red Rock, each exercisable at $2 per share for three years.
• Completion is subject to TSX Venture Exchange approval; the cash portion will be funded from existing working capital, and the royalty removal is expected to immediately improve operating margins once the El Limon plant resumes production.

Key Details

• Royalty being purchased: 3 % NSR on El Limon up to a maximum of $2,768,000, then 0.5 % NSR up to $1,384,000.
• Total purchase price: $1,876,000 (approximately £1 million) in cash.
• Warrant issuance: 200,000 common share purchase warrants at an exercise price of $2 per share, exercisable for three years from issue date.
• Financing: Cash component to be funded from Soma Gold’s existing working capital; no external financing required.
• Regulatory condition: Transaction pending approval by the TSX Venture Exchange.
• Strategic impact: Elimination of the royalty will enhance the economic profile of the El Limon operation and improve margins when production restarts (planned Q3 2025).

Notable Quotes

“The elimination of the royalty is expected to have an immediate positive impact on operating margins once the El Limon plant resumes production. The agreement not only streamlines the asset's cost structure but also demonstrates the company's commitment to unlocking the full value of its Colombian portfolio for the benefit of all stakeholders,” – Geoff Hampson, CEO, Soma Gold Corp.